UPDATE 2-CBS profit rises but misses Wall St. forecasts

Thu Feb 14, 2013 7:33pm EST

By Lisa Richwine

Feb 14 (Reuters) - CBS Corp reported a 6 percent gain in fourth-quarter profit on Thursday, boosted by political advertising on its TV networks and higher revenue from cable channel fees.

But the company's earnings-per-share for October to December fell short of Wall Street analysts' expectations, and its shares dipped nearly 1 percent after hours.

Net earnings rose 6.2 percent to $393 million, or 60 cents a share, from $370 million, or 55 cents a share, in the year-ago quarter.

Adjusted earnings of 64 cents was below the 68-cent average forecast for analysts surveyed by Thomson Reuters I/B/E/S.

Morningstar analyst Michael Corty called the overall results "pretty strong," despite falling shy of analysts' earnings-per-share estimates. "The business has a lot of momentum," he said. "As long as the ad market stays strong, which it appears to be, CBS should continue to do well."

CBS also announced plans to repurchase an additional $1 billion of its Class B common stock in 2013, a near doubling of its earlier buyback commitment.

Chief Executive Leslie Moonves said record advertising sales ahead of the U.S. presidential election in November helped lift overall revenue 2 percent, to $3.6 billion. Subscription and affiliate fees at cable networks that include the CBS Sports Network and Showtime premium channel also climbed.

Content licensing and distribution revenue fell 7 percent from a year earlier, primarily due to the timing of payments for online streaming of CBS shows, the company said. In the prior year, CBS recorded revenue from the initial streaming sale of programming from The CW network.

Those numbers will improve in the months ahead, Moonves said as demand for its online content increases. CBS recently signed deals with Amazon.com Inc, and Moonves said the company was in talks with online programmer Hulu and chipmaker Intel Corp, which aims to start a TV service.

"There is fierce competition out there for all our content," Moonves told analysts on a conference call. "The marketplace continues to develop with more and more players all wanting what we produce."

Sales of its TV shows and movies to online distributors will continue CBS's diversification from an advertising-led business model, Moonves said, predicting that company would reduce its reliance on ad revenue from about 70 percent a few years ago to just over 50 percent.

Yearly revenue from streaming contracts brings in "hundreds of millions of dollars," Chief Financial Officer Joe Ianniello said. "We haven't cracked $1 billion per year yet, but we are well on our way," he said.

CBS is the highest-rated U.S. broadcast network in overall viewers with its stable of hits such as "The Big Bang Theory" and "NCIS." The company also operates cable networks, the publishing house Simon & Schuster, and radio stations.

Revenue at the publishing unit declined 6 percent to $215 million as print book sales declined, CBS said.

Earlier on Thursday, CBS said it took a minority stake in AXS TV, a live events network that is a joint venture between billionaire Mark Cuban, AEG, Creative Artists Agency and Ryan Seacrest Media. CBS will provide promotion and content for the channel, now in 38 million homes.

Like most other broadcasters, CBS saw primetime ratings slip during the fall TV season compared with a year earlier. Only Comcast Corp's NBC gained viewers during that time. CBS ratings have rebounded this quarter, helped by the Super Bowl and Grammy awards broadcasts.

Moonves said CBS was on track to be the only network to finish the season with gains in every demographic category, providing a strong position going into the big "upfront" ad selling season in the spring.

Ad demand after the election in the "scatter" market "was the strongest we had seen in all of 2012," Moonves said. Scatter pricing during the first quarter is up by percentages "in the teens," Ianniello said.

CBS shares fell 0.8 percent to $42.60 in after-hours trading, down from their close at $42.94 on the New York Stock Exchange.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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